Crypto day trading is now becoming popular because of the advancement in technology. Trading
is no longer limited to stocks, currencies, and traditional assets, but creating many crypto
exchange platforms allows people to buy and sell crypto. And there are many benefits to trading
crypto, drawing more traders to get hooked.
What Is Crypto Day Trading?
Crypto day trading is when you enter and exit a trading position in the crypto market within the same day. Some use ‘intraday trading’ to describe this strategy, as trades don’t go over a day when it gets closed. You can find 24/7 trading issues and tips when using this strategy, but you can be profitable when you understand how it works.
What Are The Benefits Of Crypto Day Trading?
One of the benefits of crypto day trading is to earn a profit from the small moves in the crypto market. While that may be the main benefit of such a strategy, here are other benefits you can enjoy:
1. Ability To Enter Short Or Long Position
With crypto day trading, you can trade on the price movement of a digital coin. Unlike spot trading, where you buy a coin at its market price and wait for it to go up, crypto day trading allows you to buy it whether the price increases or lowers. You could go short if you analyzed that a coin’s price will go down and go long if you think it’s going up.
When your position is correct, you’ll benefit. However, your position will be lost if the coin’s value goes against the market you’re betting on. Thus, it’s best to learn how to analyze the market before going short or long.
2. Availability Of Various Day Trading Strategies
Day trading isn’t only a single strategy. There are various types of day traders because of the techniques they use. Day traders have different personalities, so knowing the different kinds of day trading strategies will help you choose the most suitable one. Here are some of them:
If you don’t have the patience to place a position that could go negative or positive throughout the day, you can use scalping. This type of daily trading strategy is based on short time intervals. It involves technical analysis and hundreds of trades within a day. The goal is to earn profits no matter how small it is in the shortest intervals of trades. When accumulated, your earnings could be significant.
- News-Based Trading
If you’re not adept with technical analysis, you can refer to news to enter a position. You’re using the news from various crypto news websites to profit whether the news is bad or good. Moreover, the technique here is to time your trade to coincide with the anticipated report, merger, announcement, or upgrade of the cryptos.
- High-Frequency Trading (HFT)
If you’re an institution, then HFT is good for you since you need powerful computer programs to perform quick, large trading orders.
When you know how to analyze and compare different crypto exchanges, arbitrage trading is for you. You get to buy crypto assets from one exchange and sell it on another where the price could be higher.
- Algorithmic Trading
This strategy is best for traders who are into trading bots or know how the algorithms work. You’ll be using trading bots to execute your trades based on the type of day trading strategy and indicators you prefer.
3. Earn More With Market Volatility
The typical feature of the crypto market is its volatility. It means you can see significant increases and dips within a single day. For instance, Bitcoin could open at USD$12,000, and after a couple of hours, it could go as high as USD$15,000.
When you’re in the long game, you know that this volatility could give you hundreds, if not thousands, of profits. You can use scalping on each movement or wait for your position to hit your target profit before the day ends. However, you should always have a stop loss where you’re willing to lose a portion of your trade if the market goes against your analysis.
4. Ability To Trade 24/7
Unlike forex exchanges and other traditional trading platforms, the crypto market doesn’t close on weekends. This benefit allows you to trade anytime and anywhere, all year round. You can execute trades without the limit of doing it from 9:30 AM to 4:00 PM. With such, you can have more earnings throughout the week.
Crypto-day trading isn’t for everyone, but it’s profitable once you find the best technique suitable for your personality. So, if you want to become a full-time trader, consider day trading with other types of trading cryptos. That way, you can maximize your profits.